MEMORANDUM AUDIT REPORT NO. 1-515-80-19, SURVEY OF URBAN EMPLOYMENT AND COMMUNITY IMPROVEMENT - PROJECT NO. 515-0130 (AID LOAN NO. 515-W-028)

Evaluation was conducted according to standard audit procedures and was based on review of project files and interviews with Government of Costa Rice (GOCR) and USAID/CR project personnel; timeframe is unspecified. Project, consisting of the employment and productivity, shelter/community infrastructure, and urban policy, planning, and project administration components, is in its early stages of implementation. Project implementation has been limited by delays in the negotiation of GOCR credits for activities of the shelter component due to the high credit rates of U.S. banks; efforts of the 11 implementing agencies to coordinate activities, with particular difficulty in the free flow of information; development of plans; budget constraints; and evaluations. Approval was granted to extend the terminal disbursement date 1 year to 12/31/82, with consideration being given to one more year"s extension; though it appears that the GOCR will have to contribute at least $1 million more to the project than was originally planned. A total of $7.4 million was allocated for the employment component for credit to small industrial firms. As of 6/30/80, only 15 loans (of 970 planned) totaling $59,420 were approved for small industries and no credit was extended to any of the three planned worker-owned and operated firms. Per the National Banking System, however, credit to these groups will improve substantially: 27 loans totaling $203,932 were approved in 7/80, 81 additional loans totaling $456,379 were being processed, and 1,560 requests for loans were being evaluated. Auditors recommend that appropriate progress reports for project activities be established; implementing agencies be encouraged to provide detailed information on achievements and problems; and a new implementation plan be formulated for the now obsolete GOCR plan. Also, more effective monitoring of local currencies is needed to assure that all project resoures are being used properly.